Nassau

Does anyone know the specific IRC Section or Treasury Regulations that states that amounts distributed from a Roth IRA are not permitted to be rolled over to a designated Roth account under section 401(a) or section 403(b) plan?

Participant would like to reinstate back into the ABC Plan. When participant rolled out of the Plan, all of his money was traditional pre-tax; however, when he rolled it to the IRA, it was converted to Roth. Since the Plan does allow Roth rollovers, is it permissible to allow the money to be restored as Roth?

Is it mandatory that the plan offer the HEART Withdrawal?

Does the HEART Act apply to NQP plans?

My client has a Safe Harbor Plan. The Safe Harbor is met by doing a Non-elective Match of 5%. The employer wanted to know if they can have the HCE only be Matched at 3%. They are looking to do this to save the company some money.

My client has a Safe Harbor Plan. The Safe Harbor is met by doing a Non-elective Match of 5%. The employer wanted to know if they can have the HCE only be Matched at 3%. They are looking to do this to save the company some money. Can they have a different Safe Harbor Match for the HCEs then the NHCEs?

My client, found that a participant's pre-tax contributions have been submitted to us by the client as After Tax Monies. For the past 4 to 5 years she has all After Tax money in her account. Due to this, she has not received any match. What are the steps to correct this? The client will change the way they submit her information to us. But we need to move the money from the After Tax Source to the Pre tax Source and also give her the match and any earnings. What needs to be done with her w-2 and yearly personal taxes?

I believe that a participant must provide the plan sponsor with proof of a hardship. Thus providing supporting documentation such as medical bills, tuition bills, notice of eviction, etc.

The plan has an active participant who is a greater than 5% owner and turned 70.5 in April of 2009 (DOB 11/09/1938). Since the 2009 RMD was not required this plan year will be their first minimum distribution they plan on taking. The plan would like to know if this year is technically considered the first RMD year allowing the participant until 4/1/2011 to satisfy the minimum distribution or if 2009 was the first even though it was not required meaning that this year's minimum distribution has to be made by 12/31/2010.

Plan has many participants on workman's comp which is paid by an outside party. Thus, they don't pay through their payroll system, and do not deduct loan payments. Should participants on workman's compensation be required to make loan payments assuming this is not considered a bonafide leave of absence since they are receiving pay? If they are receiving compensation from a third party via "workman's comp", is this still considered being paid, and thus they are required to continue to make payments just as an active participant (in other words, they LOA regs would not apply)? I am looking for guidance as to if a participant out on LTD receiving workman's compensation should make payments or not in order to determine how to proceed with many delinquent loans that are well past the cure period.

My client has an employee in bankruptcy who is considering a hardship withdrawal. His attorney told him his distribution would be exempt from any action taken by the Court as the funds are not considered wages. In other words, would he be required to disclose to the Bankruptcy Court his intent to take a hardship withdrawal? Would the Bankruptcy Court have a "claim or levy" on any funds disbursed from his retirement account? One of the ABC Company's attorneys thought he would have to obtain approval from the Bankruptcy Court to request the hardship.

ABC Company has an employee in bankruptcy who is considering a hardship withdrawal. His attorney told him his distribution would be exempt from any action taken by the Court as the funds are not considered wages. In other words, would he be required to disclose to the Bankruptcy Court his intent to take a hardship withdrawal? Would the Bankruptcy Court have a "claim or levy" on any funds disbursed from his retirement account?

My client called with the following question this morning: A distribution due to death was processed from a deceased participant account to his primary beneficiary. Prior to taking any action on the account the primary beneficiary also passed away. The client doesn't have any beneficiary designation on file for the primary bene. Would the money go to the spouse of the deceased beneficiary or would the money be transferred to the secondary beneficiary of the deceased participant?

On December 23, 2008, President Bush signed into law the "Workers, Retiree, and Employer Recovery Act of 2008." One major provision of the law allows for the suspension of required minimum distributions (RMDs) from tax-deferred retirement accounts for 2009. Plan participants who are financially able to forgo their distributions may chose to suspend the 2009 RMDs so that they don't have to sell investments that may have fallen substantially in value. Does the Workers, Retiree, and Employer Recovery Act of 2008 apply to non governmental 457 (b) Plans? Meaning that plan participants' can suspend their required minimum distributions (RMDs) for 2009?

If a company is a non-ERISA Church plan that uses a Group Custodial Agreement in lieu of a plan document. Can the company implement specific hardship provisions (e.g. using safe harbor reasons, requiring employees provide proof of need) without an amendment?

The following are action items for terminating a 403(b) plan A. 403(b) plans are generally set up under either a group format (i.e., group annuity contract) or individual account format (i.e., individual annuity contract). For 403(b) plans which utilize a group format approach and the plan sponsor is certain where all 403(b) plan assets are being held, termination of the plan is relatively straightforward and would consist of the following steps: · Adopt a resolution terminating the plan. · Amend the plan to eliminate future contributions, permit plan termination, and distribution of assets upon plan termination. · If terminating prior to 1/1/2009, the plan must satisfy all requirements of the final 403(b) regulations. · Provide notice to all interested parties in the plan, informing them of the plan termination (i.e., date of termination, time and form of distribution payments). · Fully vest participants in their account balance upon plan termination (i.e., attributable to employer contributions, employee contributions are always 100% vested). · Unallocated assets remaining in the forfeiture account must be allocated to all remaining participants and must be allocated in a non discriminatory manner (e.g.; pro-rata). Ø If the plan provides that forfeitures will be used to reduce future employer contributions, it first must be amended to provide for reallocation of forfeitures. · Upon plan termination, the mode of distribution must be by lump sum or annuity purchase. Ø Note, generally a terminating 403(b) plan is permitted to distribute accumulated benefits to plan participants as long as the employer (including any entities in the employer’s controlled group) does not make contributions to another 403(b) contract beginning on the date of plan termination and ending 12 months after distribution of all plan assets. · File a final form 5500. Note: 403(b) plans will be required to file a more comprehensive 5500 for plan years beginning in 2009. B. Actions necessary to terminate a 403(b) plan that has utilized an individual account approach or where the plan sponsor is uncertain where all plan assets are being held (e.g., due to prior 90-24 transfers), are not so clear. There is no explicit guidance on how a plan sponsor may make distribution of plan assets from accounts over which it has no control or knowledge. In some instances there may be specific contract terms prohibiting the employer to take unilateral action such as terminating the plan and forcing distributions. Consideration is particularly relevant for salary reduction only plans and school districts. In these cases sponsors should engage legal counsel for direction.

My client has just informed me that they have amended their vesting schedule effective 1/1/2007. The previous schedule was a 3 year cliff and they have changed it to a 5 year graded (20% per year). This new schedule applies to all contributions made to the plan after 1/1/2007. Is this permitted? My concern is that it is possible for someone to be 100% vested (who has worked 3 years) by 1/1/2007 in all amounts made prior to that date and then be 60% vested going forward.

My client has failed both ADP and ACP testing for 2006 and is past the Correction Period. They will be responsible for funding a QNEC to all non-highly compensated participants as part of the correction method. The question I have is can they use forfeiture as the plan does not allocate and uses to reduce employer contributions. I have found other questions on the database that say yes to a QNEC regarding missed contributions and earnings but I want to be clear that in a testing failure situation this rule would still apply.

A Participant is thinking of enrolling in a plan & moving his balances in two former employer 403b7 plans @ ABC Co. into the 403b7 @ DEF Co. Both of the two plans he is looking into moving have pre87 dollars (about $95k total) that are grandfathered. He knows that VG does not keep track of grandfathered dollars and is aware that he must do it. He is willing to do that. There is a question of: Does the ppt lose the grandfathered status of the pre87 403b7 balances in these two plans if he moves them from ABC Co. plan @ DEF Co.? He knows he would lose the status if he moved them to an IRA. ABC Co. told him he would not lose the status if he moved the plans to the 403b7 he has @ ABC Co. He would rather move them to DEF Co.

To answer your first question, Effective January 1, 2009 all 403(b) plans (i.e., active or frozen status) must be maintained pursuant to a written plan document. Below are some points of interest: Should a 403(b) plan sponsor terminate its plan? If so, how is it done? In order to help a 403(b) sponsor determine whether it is in their best interest to terminate their 403(b) plan it is necessary to understand what the sponsor is attempting to achieve as a result of the plan termination. 1) If the sponsor is attempting to gain administrative efficiencies (or reduce administrative burdens) and consolidate retirement plans, the following are some items for consideration: • A 403(b) plan cannot be merged with a 401(a) or 457 plan. This includes profit sharing, 401(k), and money purchase pension plans. • A 403(b) plan can be merged with another 403(b) plan of the same employer. Plan merger is not a distributable event for participants thereby avoiding any potential leakage of a participant’s retirement assets to be used for non-retirement purposes. • Transition coverage and provision of benefits to an employer’s existing qualified plan (if available) and terminate the 403(b) plan.  Terminating the 403(b) plan is a distributable event for participants and introduces leakage risk. To minimize risk, sponsors can encourage participant rollovers (sponsor cannot force rollovers) to the plan under which participants are covered. 2) If the sponsor is attempting to simplify their retirement benefit program by reducing the number of plans to which participants can contribute or receive contributions, the following are some items for consideration: • Transition coverage and provision of benefits to an existing qualified plan (if available) and freeze or terminate the 403(b) plan.  Freezing the 403(b) plan is not a distributable event for participants so there is no leakage risk.  Terminating the 403(b) plan is a distributable event for participants and introduces leakage risk. To minimize risk sponsors can strongly encourage rollovers (sponsor cannot force rollovers) to the plan under which participants are covered. 3) If the sponsor is attempting to rid themselves of 403(b) administration and compliance • The plan sponsor must amend the plan to eliminate future contributions for existing participants, and allowing plan provisions that permit plan termination. • The plan sponsor must satisfy all requirements of the final 403(b) regulations. • Notice is given to all interested parties in the plan, informing them of the plan termination (i.e., date of termination, time and form of distribution payments). • All affected participants must become fully vested in their account balance upon plan termination. • Reasonable steps must be taken to locate any missing participants or beneficiaries with account balances. • Unallocated assets remaining in the forfeiture account must be allocated to all remaining participants and must not result in prohibited discrimination. o If the plan provides that forfeitures will be used to reduce future employer contributions, it first must be amended to provide for reallocation of forfeitures. • Upon plan termination, the mode of distribution must be by lump sum, rollover to an eligible retirement plan, IRA, or an annuity purchase option. o Note that the terminating 403(b) plan is permitted to distribute accumulated benefits to plan participants as long as the employer (including any entities in the employer’s controlled group) does not make contributions to another 403(b) contract during the 12 months before or after the termination.

For the required PPA provision of electronic display of annual report information, has the DOL filing requirement been finalized? This client does not have an intranet site, however, has distributed a Summary Annual Report to all participants by mail, along with filing an electronic copy to the DOL. Will this meet the requirements?

For the required PPA provision of electronic display of annual report information, has the DOL filing requirement been finalized? This client does not have an intranet site, however, has distributed a Summary Annual Report to all participants by mail, along with filing an electronic copy to the DOL. Will this meet the requirements?

Does the Heroes Earnings Assistance and Relief Tax Act of 2008, HR. 6081 apply to all plan types? such as 403(b) and 457(b) governmental plans?

We are converting a plan that will map all participants to Target Retirement Funds (QDIA). We are providing a 30 day window to allow participants to choose a different allocation if they would like to. This "window" will close 2 weeks prior to the date assets are received and invested. The plan also has automatic enrollment. I have two questions: 1. Will closing the "window" two weeks prior to assets being mapped to the Target Retirement Fund still qualify the plan for 404 © protection. 2. If someone is automatically enrolled in the plan at the prior recordkeeper during the 30 day window (meaning this person will not be on our companies systems). How does the 404 © protection apply since these individuals may not have a full 30 days depending on when they are automatically enrolled at the prior recordkeeper I'd like to know what the options are for this scenario? Will a communication to all individuals who are to become eligible during this time outlining the process suffice or are there special issues that may need to be considered around this?

ABC Company is a non-ERISA Salary Reduction Only plan. The new plan sponsor is considering changing the plan to be an ERISA plan. What steps are necessary to effect this change from the plan sponsor and/or legal counsel.